SQ - Embedded Expectations Analysis - 2019 06 19
Square, Inc. (SQ:USA) is currently trading at historical highs relative to UAFRS-based (Uniform) Earnings, with a 72.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about their mobile app sales strategy, revenue growth, and the utility of their mobile app and POS hardware.Specifically, management may be concerned about the use of third-party tools with their systems, their partnership with Eventbrite, and the fluidity of their mobile app sales strategy. Also, they may lack confidence in their ability to identify the needs of customers, sustain revenue growth, enrich their ecosystem through consolidations, and market the Square Card and payment platforms. Finally, they may be exaggerating the utility of their mobile app and POS hardware, the benefits of the Cash App, and the potential growth opportunities from international sporting events.
Square is a commerce ecosystem that combines software with hardware to enable sellers to turn mobile devices and computing devices into payment and point-of-sale solutions. With the company's offering, a seller can accept payments via magnetic stripe, Europay, MasterCard, and Visa, or Near Field Communication; or online via Square Invoices, Square Virtual Terminal, or the seller's website or app. Also, sellers can gain access to reporting and analytics, next-day settlements, digital receipts, payment dispute and chargeback management, security, and Payment Card Industry compliance. The company's Cash App enable individuals to send and receive money electronically to and from individuals and businesses.
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